In a major legislative shift, the UK has released a draft that aims to integrate cryptocurrencies into regulated financial activities. The new Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025 lays out stringent guidelines requiring all crypto trading platforms, stablecoin issuers, custodians, and staking providers to obtain full licensing from the Financial Conduct Authority (FCA). Those operating without a license may face severe penalties.

Key Features of the New Law:

• Crypto Exchanges must register similarly to stock exchanges.
• Stablecoin Issuers treated as traditional banks.
• Custodians are mandated to adhere to rigorous safeguarding regulations.
• Registration requirements for Staking Providers, including decentralized ones.

Additionally, the legislation extends UK jurisdiction globally, meaning any foreign crypto service that offers services to UK residents must comply with local laws.

The broad definition of what constitutes a ‘crypto asset’ will affect a wide range of digital tokens, ensuring almost all cryptos fall under regulatory scrutiny.

Controversies Raised:

• Even minor staking activities risk full regulation, potentially hampering DeFi services.
• Heavy disclosure requirements may negatively impact stablecoins.
• Startups could flee the UK market due to overwhelming compliance demands.

Despite changes in leadership, the current government maintains the prior administration’s aggressive plans for crypto regulation, indicating a strong desire to establish the UK as a domineering force in the global market for regulated cryptocurrencies. As crypto firms worldwide weigh their options, the message is clear: adapt or exit the UK marketplace.